|By Business Wire||
|May 9, 2014 03:10 AM EDT||
The Executive Chairman of Telefónica (NYSE:TEF) (LSE:TDE), César Alierta, emphasised that “our performance in the quarter was in line with the targets set for the year. First quarter results show visible progress in the execution of the strategy announced for 2014, based on further reinforcing the differentiation of our products and services through a non-replicable infrastructure. In this sense, we are making significant investments, accelerating our network modernization”.
- The Company reaches a leverage ratio of 2.30 times OIBDA after having reduced its net debt by 2,657 million euros in the first quarter to bring it down to 42,724 million euros.
- The Company’s earnings grew organically (+1.5%) for the fourth quarter running to stand at 12,232 million euros at 31 March 2014. It is worth highlighting the growth of our mobile data earnings (+8.8%), which represent 40% of total mobile revenues, and the strong growth of our high-value client base, coming from mobile contract (+9%), smartphone penetration and also of our fibre and pay TV operations.
- OIBDA totalled 3,929 million euros and accelerates its organic growth (+0.5%) compared to the previous financial year thanks to the sustained growth of earnings and the success of the expenses control and efficiency measures implemented by the Company.
- The variation in exchange rates had an impact on our 1Q14 results by bringing year-on-year earnings growth down by 11.8 p.p. and reducing OIBDA by 11.7 p.p. Earnings were also affected by perimeter changes, especially by the sale of Telefónica Czech Republic, which brought them down by 3.1 p.p., with OIBDA falling by 3.7 p.p.
- The acceleration of our network modernization reflects in a significant organic CapEx increase (+29.5%) compared to the first quarter of 2013. Investments related with transformation and growth accounted for over two thirds of the total CapEx figure in the first quarter.
- Despite this significant organic increase of CapEx and the effect of exchange rates and perimeter changes, the Company reported a solid cash flow generation, with a relevant improving year-on-year by 796 million euros, the largest in a first quarter since 2011.
- The results reported by Telefónica Spain reflect the continued recovery of the business. Earnings show an important improvement in the downward trend in 3.7 p.p. compared to the previous quarter and an improved commercial development, mostly in fibre, pay TV and an increased preference for quality services. Movistar Fusión remained the fundamental lever for growth in Spain with a customer base of 3.2 million.
- Telefónica Brazil also continued to strengthen its leadership in the highest value segments thanks to the competitive advantage it enjoys in network coverage and quality and to the universal appeal of its commercial offerings. This translated into an organic earnings growth of 2.9% (ex-regulation) and once more highlights the Company’s net profit performance in the contract segment (1.2 million accesses) and with respect to fibre rollout, with the current figure of 1.5 million homes passed.
- Telefónica’s market financing activities during the first quarter ended it at around 5,700 million euros, meaning that the Company finds itself in a comfortable position regarding liquidity from which to tackle the next round of debt payments.
Telefónica’s 1Q14 results are in line with the Company’s internal earnings, OIBDA and CAPEX over sales estimates and therefore reiterates its operational and financial targets for the year, including the dividend. During the first three months of the year Telefónica moved forward with the implementation of its transformation strategy and operating model, the aim of which is to maximise value creation and make the most of the growth opportunities offered by the digital revolution.
According to Telefónica Chairman César Alierta, “we continue to improve our financial flexibility, posting the strongest first quarter cash flow generation in the last three years after registering a solid year-on-year improvement, despite higher investments, the negative impact of exchange rates and asset disposals. This allowed to register a further decline in net debt another quarter, bringing total reduction to around 16 billion euros over the last 7 quarters”.
In this respect, the results presented today by Telefónica reflect the improvement in the organic growth of its earnings and OIBDA thanks to the strategy of attracting high-value customers, the efforts being made to simplify its operation and cost savings. It is also worth highlighting the continued reduction of the Company’s debt level, which has fallen by 2,657 million euros with respect to December 2013 to stand, at the end of March of this year, at 42,724 million euros. Were operations subsequent to the closure of the first quarter to be included (sale of Telefónica Ireland), the debt would stand at 41,944 million euros. Therefore, at the end of March the debt ratio (net debt over OIBDA) stood at 2.30 times, and this would be reduced to 2.27 times were the aforementioned operations carried out after the close of the quarter to be included.
Regarding accesses, at the end of March they totalled 313.1 million, 1% less than one year ago, due precisely to the deconsolidation of the business in Czech Republic and to the sale of the residential business in the UK, without the effect of which they would have enjoyed a year-on-year growth of 2%.
By segments, mobile accesses increased by 3% year-on-year in organic terms to 247.5 million at the end of the quarter thanks to strong contract access growth (+9% organic), accounting for 35% of the total (+1 percentage point year-on-year). Particularly noteworthy is T. Brasil’s ongoing progress in capturing high-value customers (+28% year-on-year in contract customers, with net additions in the quarter up 70% year-on-year). Smartphone (all with a data plan attached) penetration stood at 30% at the end of March 2014 (+9 percentage points year-on-year) and retail fixed broadband accesses totalled 17.6 million, up 2% vs. March 2013 in organic terms. Pay TV accesses (3.6 million) rose 8% year-on-year, highlighting the performance of T. España (consolidating its recovery trend for the second quarter in a row) and the double-digit year-on-year growth of T. Hispanoamérica and T. Brasil.
According to César Alierta, “we are building a more sustainable growth model leveraged on higher customer satisfaction. The acceleration in the modernisation of our networks is reflected commercially in the evolution of our customer base; contract mobile accesses grew almost double-digit year-on-year underpinned by the acquisition of almost 6 million smartphone customers, doubling the figure of the first quarter of 2013 while in the fixed business, fibre customer base increased 90% year-on-year. As a result, the value of our customer base has increased due to both the improved ARPU and the higher loyalty, leading to a longer average customer lifetime”.
Apart from perimeter changes, exchange rate fluctuations, in particular the depreciations of the Brazilian reai and the Argentine peso along with the implicit devaluation of the Venezuelan bolivar, negatively impacted financial results. Thus, in the January-March period exchange rates deducted 11.8 percentage points to year-on-year revenue growth and 11.7 percentage points to OIBDA growth.
Revenue organic growth for the fourth quarter in a row
First quarter revenues totalled 12,232 million euros in January-March 2014, up 1.5% year-on-year in organic terms (-13.5% reported), posting positive growth for the fourth quarter in a row and accelerating vs. full-year 2013. Excluding the negative impact of regulation, organic revenues grew 3.4% compared with January-March 2013.
By services, mobile data revenue growth accelerated compared with the previous quarter (+8.8% year-on-year in organic terms; +7.8% in the fourth quarter of 2013), now accounting for 40% of mobile service revenues, up 2 percentage points compared with the first quarter of 2013. It is also noteworthy the performance of non-SMS data revenues in January-March 2014, improving year-on-year growth to 23.6% in organic terms and already accounting for 71% of total data revenues (+8 percentage points year-on-year).
Consolidated operating expenses totalled 8,548 million euros in the quarter, up 1.5% year-on-year in organic terms (-13.0% reported), with the pace of year-on-year growth easing for the second consecutive quarter due to strict cost control and efficiency measures, despite the high level of commercial activity.
Operating income before depreciation and amortisation (OIBDA) in the first quarter of 2014 amounted to 3,929 million euros, up 0.5% year-on-year in organic terms (-14.0% reported), with growth accelerating vs. full year 2013 and posting positive year-on-year growth for the second consecutive quarter. This performance was underpinned by sustained revenue growth and cost containment measures, along with efficiencies and synergies from the new operating model. Excluding the adverse impact of regulation, OIBDA grew by 1.9% compared with January-March 2013 in organic terms.
The OIBDA margin stood at 32.1% at the end of the first quarter, virtually stable year-on-year in organic terms compared with the same period of 2013 (-0.3 percentage points). Operating income (OI) in the first quarter of 2014 stood at 1,838 million euros, up 5.2% year-on-year in organic terms (-11.0% reported).
As a result, consolidated net income in the first quarter amounted to 692 million euros (-23.2% year-on-year; 16.6% underlying) and basic earnings per share amounted to 0.15 euros per share (-27.0% year-on-year; -20.0% underlying).
CapEx up to March totalled 1,555 million euros (-19.9% year-on-year) and included 187 million euros relating to the acquisition of spectrum in Colombia and Central America (695 million euros in the first quarter of 2013, mainly in the UK). In organic terms, investments rose 29.7% year-on-year, with more than 69% of total investments devoted to business transformation and growth.
As a result, free cash flow amounted to 339 million euros in the first quarter, the highest since 2011, posting a significant year-on-year improvement of 796 million euros.
Financing activity of 5,700 million euros in the quarter
In the first quarter of 2014, Telefónica's financing activity through bond and loan markets stood at around 5,700 million equivalent euros. This activity was mainly focused on strengthening the liquidity position and smoothing the debt maturity profile of Telefónica S.A. for the following years. Therefore, as of the end of March, the Group maintains a comfortable liquidity position to accommodate next years debt maturities. In Hispanoamérica, Telefónica's subsidiaries tapped financing markets for approximately 124 million equivalent euros in the first quarter of 2014. Also noteworthy is the 500-million-euro bond placement by T. Deutschland in January.
Telefónica maintains total undrawn committed credit lines with different credit entities for an approximate amount of 12,560 million euros, with around 11,250 million maturing in more than 12 months.
Digital Services and Telefonica Global Resources
In the new area of the Chief Commercial Digital Officer, recently established to bring digital services to the core of our businesses, we could highlighted in the B2B area, the M2M agreement signed by Telefónica with JCDecaux, the world’s leader in outdoor advertising, to bring connectivity and new digital features to a new range of smart M2M powered solutions for urban environment in Europe and Latin America; and the one reached with Tesla, an industry-leader of in-car telematics. Thus, M2M revenue grew by more than 50% year-on-year in organic terms in the first quarter.
With regards to Cloud services, revenue advanced by more than 20% organic year-on-year in the first three months of the year, gradually adding value to our offering. Information Security revenues grew slightly above 20% organic year-on-year in the quarter fueled by strong momentum in “CyberSecurity”.
It should be also mentioned some strategic investments made as the creation of “Axonix”, the first mobile Advertising exchange platform owned and powered by a mobile operator; the one reached with “Saluspot” for E-health services, which enables to offer free online health advice; and the Spanish cloud computing start-up “eyeOS” was acquired, enabling Telefónica to offer an open-source desktop virtualisation service.
In Video, within the area of Consumer, Telefónica acquired for Spain exclusive content rights in Moto GP and Formula 1. Thus, the strategic focus on fostering Pay TV growth is delivering positive results with revenues growing in organic terms by 12% year-on-year and accesses by 8% year-on-year in the quarter, and increasing market share in the main markets where the Company is present.
Additionally, in April the brand of the Digital Financial Services (“Yaap”) to be provided in Spain by the joint venture established with CaixaBank and Santander was announced. Two services will be launched in the coming months, “Yaap Shopping”, a virtual showroom helping small businesses, and “Yaap Money”, a peer to peer service that will enable people to send money from one mobile device to another.
Telefónica Global Resources continued driving the Company's technological transformation during the quarter, accelerating network modernisation and simplification, ensuring a higher quality of infrastructure and systems and enhancing the differentiation of products and services. In the global Network and Operations unit sharply accelerated the rollout of ultra-broadband infrastructure. Homes passed with fibre amounted to 5.8 million, around 80% more than in March 2013, and LTE sites deployment increased by more than 3 times year-on-year to reach more than 10,200 sites. The global IT unit is developing the Company's IT transformation strategy through: (i) consolidation, focusing on the Data Centres, technical infrastructure and corporate applications; (ii) simplification and transformation of applications; and (iii) support for transformation towards a Digital Telco.
In his session at @ThingsExpo, Chris Klein, CEO and Co-founder of Rachio, will discuss next generation communities that are using IoT to create more sustainable, intelligent communities. One example is Sterling Ranch, a 10,000 home development that – with the help of Siemens – will integrate IoT technology into the community to provide residents with energy and water savings as well as intelligent security. Everything from stop lights to sprinkler systems to building infrastructures will run ef...
May. 2, 2016 07:00 PM EDT Reads: 1,023
SYS-CON Events announced today that Peak 10, Inc., a national IT infrastructure and cloud services provider, will exhibit at SYS-CON's 18th International Cloud Expo®, which will take place on June 7-9, 2016, at the Javits Center in New York City, NY. Peak 10 provides reliable, tailored data center and network services, cloud and managed services. Its solutions are designed to scale and adapt to customers’ changing business needs, enabling them to lower costs, improve performance and focus inter...
May. 2, 2016 06:30 PM EDT Reads: 1,278
You think you know what’s in your data. But do you? Most organizations are now aware of the business intelligence represented by their data. Data science stands to take this to a level you never thought of – literally. The techniques of data science, when used with the capabilities of Big Data technologies, can make connections you had not yet imagined, helping you discover new insights and ask new questions of your data. In his session at @ThingsExpo, Sarbjit Sarkaria, data science team lead ...
May. 2, 2016 06:00 PM EDT Reads: 950
Artificial Intelligence has the potential to massively disrupt IoT. In his session at 18th Cloud Expo, AJ Abdallat, CEO of Beyond AI, will discuss what the five main drivers are in Artificial Intelligence that could shape the future of the Internet of Things. AJ Abdallat is CEO of Beyond AI. He has over 20 years of management experience in the fields of artificial intelligence, sensors, instruments, devices and software for telecommunications, life sciences, environmental monitoring, process...
May. 2, 2016 05:15 PM EDT Reads: 970
Increasing IoT connectivity is forcing enterprises to find elegant solutions to organize and visualize all incoming data from these connected devices with re-configurable dashboard widgets to effectively allow rapid decision-making for everything from immediate actions in tactical situations to strategic analysis and reporting. In his session at 18th Cloud Expo, Shikhir Singh, Senior Developer Relations Manager at Sencha, will discuss how to create HTML5 dashboards that interact with IoT devic...
May. 2, 2016 05:00 PM EDT Reads: 1,079
So, you bought into the current machine learning craze and went on to collect millions/billions of records from this promising new data source. Now, what do you do with them? Too often, the abundance of data quickly turns into an abundance of problems. How do you extract that "magic essence" from your data without falling into the common pitfalls? In her session at @ThingsExpo, Natalia Ponomareva, Software Engineer at Google, will provide tips on how to be successful in large scale machine lear...
May. 2, 2016 03:45 PM EDT Reads: 1,331
The IoTs will challenge the status quo of how IT and development organizations operate. Or will it? Certainly the fog layer of IoT requires special insights about data ontology, security and transactional integrity. But the developmental challenges are the same: People, Process and Platform. In his session at @ThingsExpo, Craig Sproule, CEO of Metavine, will demonstrate how to move beyond today's coding paradigm and share the must-have mindsets for removing complexity from the development proc...
May. 2, 2016 03:00 PM EDT Reads: 319
SYS-CON Events announced today that Ericsson has been named “Gold Sponsor” of SYS-CON's @ThingsExpo, which will take place on June 7-9, 2016, at the Javits Center in New York, New York. Ericsson is a world leader in the rapidly changing environment of communications technology – providing equipment, software and services to enable transformation through mobility. Some 40 percent of global mobile traffic runs through networks we have supplied. More than 1 billion subscribers around the world re...
May. 2, 2016 02:45 PM EDT Reads: 1,073
You deployed your app with the Bluemix PaaS and it's gaining some serious traction, so it's time to make some tweaks. Did you design your application in a way that it can scale in the cloud? Were you even thinking about the cloud when you built the app? If not, chances are your app is going to break. Check out this webcast to learn various techniques for designing applications that will scale successfully in Bluemix, for the confidence you need to take your apps to the next level and beyond.
May. 2, 2016 12:00 PM EDT Reads: 1,544
There is an ever-growing explosion of new devices that are connected to the Internet using “cloud” solutions. This rapid growth is creating a massive new demand for efficient access to data. And it’s not just about connecting to that data anymore. This new demand is bringing new issues and challenges and it is important for companies to scale for the coming growth. And with that scaling comes the need for greater security, gathering and data analysis, storage, connectivity and, of course, the...
May. 2, 2016 11:45 AM EDT Reads: 944
SYS-CON Events announced today that Fusion, a leading provider of cloud services, will exhibit at SYS-CON's 18th International Cloud Expo®, which will take place on June 7-9, 2016, at the Javits Center in New York City, NY. Fusion, a leading provider of integrated cloud solutions to small, medium and large businesses, is the industry's single source for the cloud. Fusion's advanced, proprietary cloud service platform enables the integration of leading edge solutions in the cloud, including cloud...
May. 2, 2016 10:00 AM EDT Reads: 2,627
Digital payments using wearable devices such as smart watches, fitness trackers, and payment wristbands are an increasing area of focus for industry participants, and consumer acceptance from early trials and deployments has encouraged some of the biggest names in technology and banking to continue their push to drive growth in this nascent market. Wearable payment systems may utilize near field communication (NFC), radio frequency identification (RFID), or quick response (QR) codes and barcodes...
May. 2, 2016 09:15 AM EDT Reads: 862
The increasing popularity of the Internet of Things necessitates that our physical and cognitive relationship with wearable technology will change rapidly in the near future. This advent means logging has become a thing of the past. Before, it was on us to track our own data, but now that data is automatically available. What does this mean for mHealth and the "connected" body? In her session at @ThingsExpo, Lisa Calkins, CEO and co-founder of Amadeus Consulting, will discuss the impact of wea...
May. 2, 2016 08:45 AM EDT Reads: 791
SYS-CON Events announced today that DatacenterDynamics has been named “Media Sponsor” of SYS-CON's 18th International Cloud Expo, which will take place on June 7–9, 2016, at the Javits Center in New York City, NY. DatacenterDynamics is a brand of DCD Group, a global B2B media and publishing company that develops products to help senior professionals in the world's most ICT dependent organizations make risk-based infrastructure and capacity decisions.
May. 2, 2016 06:30 AM EDT Reads: 2,537
The IoT has the potential to create a renaissance of manufacturing in the US and elsewhere. In his session at 18th Cloud Expo, Florent Solt, CTO and chief architect of Netvibes, will discuss how the expected exponential increase in the amount of data that will be processed, transported, stored, and accessed means there will be a huge demand for smart technologies to deliver it. Florent Solt is the CTO and chief architect of Netvibes. Prior to joining Netvibes in 2007, he co-founded Rift Technol...
May. 1, 2016 11:00 PM EDT Reads: 1,621
We’ve worked with dozens of early adopters across numerous industries and will debunk common misperceptions, which starts with understanding that many of the connected products we’ll use over the next 5 years are already products, they’re just not yet connected. With an IoT product, time-in-market provides much more essential feedback than ever before. Innovation comes from what you do with the data that the connected product provides in order to enhance the customer experience and optimize busi...
May. 1, 2016 05:00 PM EDT Reads: 1,079
SYS-CON Events announced today that Stratoscale, the software company developing the next generation data center operating system, will exhibit at SYS-CON's 18th International Cloud Expo®, which will take place on June 7-9, 2016, at the Javits Center in New York City, NY. Stratoscale is revolutionizing the data center with a zero-to-cloud-in-minutes solution. With Stratoscale’s hardware-agnostic, Software Defined Data Center (SDDC) solution to store everything, run anything and scale everywhere...
May. 1, 2016 01:30 PM EDT Reads: 1,605
Angular 2 is a complete re-write of the popular framework AngularJS. Programming in Angular 2 is greatly simplified – now it's a component-based well-performing framework. This immersive one-day workshop at 18th Cloud Expo, led by Yakov Fain, a Java Champion and a co-founder of the IT consultancy Farata Systems and the product company SuranceBay, will provide you with everything you wanted to know about Angular 2.
May. 1, 2016 01:00 PM EDT Reads: 1,779
SYS-CON Events announced today that Men & Mice, the leading global provider of DNS, DHCP and IP address management overlay solutions, will exhibit at SYS-CON's 18th International Cloud Expo®, which will take place on June 7-9, 2016, at the Javits Center in New York City, NY. The Men & Mice Suite overlay solution is already known for its powerful application in heterogeneous operating environments, enabling enterprises to scale without fuss. Building on a solid range of diverse platform support,...
May. 1, 2016 12:15 PM EDT Reads: 2,359
Whether your IoT service is connecting cars, homes, appliances, wearable, cameras or other devices, one question hangs in the balance – how do you actually make money from this service? The ability to turn your IoT service into profit requires the ability to create a monetization strategy that is flexible, scalable and working for you in real-time. It must be a transparent, smoothly implemented strategy that all stakeholders – from customers to the board – will be able to understand and comprehe...
May. 1, 2016 11:00 AM EDT Reads: 1,122